Key Points: Spending on leisure has begun to recover, but if the category’s PCE share were to return to trend, revenues would grow +10-12% in each of the next two years. That’s more than double the pace of overall consumption, and it doesn’t even presume a recovery of sales that were lost during the pandemic. We think leisure stocks have legs.
Key Points: Over the past year, the market was convinced that higher rates would derail the consumer, but that’s not what happened. The debate is likely to get turned on its head this year – some are suggesting that falling rates will stimulate consumption, but we’re not taking the bait just yet.
Key Points: We’ve been bullish on the consumer for the past two years and at the same time, we’ve been skeptical that the low-end would be able to keep up. Stocks that cater to the low-end have indeed underperformed, and our sense is that investors have written the cohort off as a problem child. We’re starting to see reasons for optimism. Our original concern was that the low-end ran through “excess savings”, but that’s one
Key Points: The auto industry missed out on selling 9 million units over the past few years. The question we have is whether that pent-up demand will ultimately surface, or remain latent. This report assesses demand trends, supply dynamics, and credit conditions with the aim of understanding where the auto cycle is headed. We suspect that usage will factor into the replacement cycle. Miles driven are still (5)% below normal, and by our count, the
Key Points: The consumer has stood strong in the face of meaningful headwinds, and we think they’ll continue to hold up well in 2024. The uptick in credit card delinquencies seems to run counter to our thesis, so the aim of this report is to understand why delinquencies are moving in the wrong direction, and what that might mean for PCE in the year ahead. A little over a year ago, credit card balances eclipsed
Key Points: The housing market is typically the Fed’s most reliable transmission mechanism, and while housing activity has slowed markedly, the tack-on effects have yet to sink the economy or the consumer. Housing is a complex subject, and there’s no shortage of data to analyze. We focus our energies in this report on demographics, the normalization of pandemic effects, spending on home improvement, and the labor market. Housing turnover has reacted to rate hikes much
There’s a lot going on in consumer land, and this webinar measures the headwinds and tailwinds facing the consumer in 2025 and 2026. Late last year we grew concerned that the consumer was off kilter — employment and spending trends were unbalanced, and we were concerned that policy would dampen spending growth. Now that fiscal stimulus is in the works, our outlook has turned more neutral. There’s lots of math in this presentation, especially as it pertains to policy — immigration, tariffs, and fiscal stimulus. …
We’ve been cautious on the consumer for the past six months. It’s not just about tariffs. Employment growth is lopsided, PCE growth has been of low quality, immigration will soon begin to weigh on aggregate demand, the credit impulse is muted, the “wealth effect” is reversing, and real wage growth is already slowing. Tariffs are a headwind, but they don’t anchor our view. This 30-minute webinar walks through a ton of useful data.
We hosted a timely webinar that outlined a few tail risks. Employment growth is being driven by acyclical sectors like government and health care. Both of these are under a microscope. Job gains are heavily skewed to large firms with over 500 employees. That adds risk to the equation. Immigrants have also been driving the train, but for how long? Tail risk is also discernible within PCE. Obscure categories are growing twice as fast as “bankable” categories. Have a listen!
Hal Lawton joins a growing list of CEOs that’ve graced us with their presence. He shared key insights on our podcast. We talked about how a tight housing market pushed Millennials into TSCO’s catchment area. We talked about TSCO’s 7% market share, and the fact that outsized comps were driven by transactions, not ticket. TSCO has no direct peer — that means it doesn’t have to share its slice of the market with “like” competitors or fall prey to their mistakes. Give a listen!
We hosted a webinar to review the state of the consumer and to detail why 2025 might hold a few surprises. We dive into the labor markets with a focus on immigration; we assess the implications of other policies such as tariffs and taxes; we explore household balance sheets to understand how wealth and leverage might influence consumer spending. Our take is that a softening consumer will impact the interest rate environment, and that in turn, can have meaningful implications for stock selection. The slides…
Brinker has been on a tear. Same store sales have been ripping even as other restaurants are struggling. We talk with CFO Mika Ware who has a unique perspective on the company’s turnaround. It’s a classic case of blocking and tackling — slimming down the menu, simplifying recipes, improving standards, and killer marketing that’s informed by insights and data. It sounds like Brinker has more work to do at Chili’s, and it might be able to replicate that success with other banners.